With Binance, doubts are growing. Less than a few weeks after the collapse of FTX, there is already clear talk that the financial stability of the world’s first crypto exchange will not be ensured. Changpeng Zhao wanted to provide transparency to investors by disclosing details about his reserves and once again supporting regulation, but the confidence of analysts and financial experts is going downhill.

Reports on its reserves are not convincing. There is a key point, and that is, as a privately held company that is not publicly traded, Binance does not need to provide comprehensive financial audits. Yes, he’s presented his various reports on transparency and reservations, but experts consulted by the Wall Street Journal point out that it’s hard to be satisfied.

“Binance has not published anything that provides a complete overview of its financial position or liquidity. Nor has it indicated that it plans to do so,” said Douglas Carmichael, chief auditor of the US Public Company Accounting Oversight Board.

There are only three numbers in the entire report. Mazars’ independent report is not befitting a serious company as Binance promised. It’s a few pages of documents with only three numbers appearing in practice on Binance reserves. However, the South African auditor also explains that he “cannot reach a conclusion” beyond this limited information, so even the figures he gives are not reliable.

As disclosed by the WSJ, the report shows that their clients have 597,602 Bitcoins, while their asset accounts have 582,486 Bitcoins. According to Binance, a difference of approximately $245 million is explained by its customer loan program. This results in client funds being 97% or 101% guaranteed.

They promise more information soon. Beyond the reliability of the numbers, what seems clear is the lack of serious and thorough auditing. A full-fledged “red flag” according to explains John ReedFormer employee of the US regulator for over 18 years.

Binance’s response is that this is only “the first step in a very long process”. That is, it excuses itself in the complexity of reviewing its reserves. But this start has already raised a lot of doubts.

Binance CEO is under investigation for money laundering. There is an additional case where Binance executives are known to have been investigated by the United States Department of Justice since 2018. This is a criminal investigation that has not yet been concluded due to possible money laundering.

American Justice is skeptical. As announced by Reuters, the Justice Department has delayed its decision on Binance’s criminal investigation. Half of prosecutors believe there are compelling reasons to charge Changpeng Zhao and several Binance executives with possible money laundering charges, while other prosecutors are uncertain.

A negative attitude by prosecutors towards Binance, beyond what judges may learn later, could seriously undermine confidence in the crypto industry, in which Binance plays a crucial role.

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